CURRENCY is PRESENT WEALTH

SSET 28 – CURRENCY is PRESENT WEALTH [1]

“Currency is the only thing that competition would not reduce,

Since its appeal is based on retaining it “famine”

Friedrich A. Hayek

In this work we refer to the currency like economic good ($) and its subjective value relative to wealth [v$(q)], not to its function as an economic unit of measure [vu$(q)].

We will demonstrate that the currency, whatever its forms, is WEALTH, and PRESENTE, for this purpose we deploy the necessary theoretical tolls:

  • Fallible man: which he suffers by needs.
  • Economic goods, useful and scarce things that meet human needs, they can be present or future.
  • Wealth: value (subjective) that the human being assigns to economic goods.
  • The economic exchange: it is an act between parties, through which each participant gives a manifestation of wealth in exchange for another manifestation of wealth that he considers of greater value. It follows that: there is no economic exchange of a thing that is not wealth present in the act of exchange.
  • Exchange types: there are essentially two types of exchanges [2]

Counted: it is the Exchange of present economic goods.

Credit: is the exchange of present economic goods for future economic goods (economic goods that will be present in the future). [3]

  • Current (subjective) value of a credit: it is the present value that is assigned to the future value of an economic good. The difference between the current value (CV) and the future value (FV) is the economic time (n), the value of which is the interest (i). [4]

[1] Work dedicated especially to my dear friend Manuel Polavieja, because it was inspired by one of many epistolary exchanges we have. If this work serves science, thanks Manuel.

[2] Not forgetting leasing and other instrument …

[3] As we have discussed in SSET 11 – Credit is present wealth.

[4] The financial mathematics helps us calculate: CV = FV / (1+i).



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